In 2009, the EBRD provided a €200 million unsecured corporate loan to Magyar Olaj- és Gázipari Nyilvánosan Müködö Részvénytársaság, commonly referred to as MOL Hungarian Oil and Gas Public Limited Company (“MOL” or the ”Company”), for the completion and conversion of a Szőreg-1 reservoir in the depleting Algyő oil field, Hungary into underground gas storage facility (“UGS”). Since then, the facility has been completed as planned in the first quarter of 2010 with a 1.9bcm mobile and 25mcm/day peak capacity, used for both strategic (since January 2010) and commercial (since March 2010) purposes.
In 2013, the EBRD converted €100 million of the outstanding amount of the unsecured corporate loan into a project finance facility for the gas storage operator, following the sale of MOL’s stake in the Project Company to the Hungarian Development Bank (wholly owned by the Hungarian state) and to the Hungarian Hydrocarbon Stockpiling Association. The EBRD project finance loan was extended in parallel to financing syndicated by a group of commercial banks.
The project was expected to have positive demonstration effect by showing the viability of transferring the responsibility of developing, building and operating a gas storage facility that will serve both strategic and commercial purposes to a Joint Venture of an association of private sector gas traders and a private company. Positive effects were also expected on the competition in the provision of commercial gas storage and regional gas supply flexibility, as the construction and operation of the proposed facility will provide an alternative option to the existing monopoly. Enhancement of standards of corporate governance and business conduct has also been sought. The transition impact objectives of the project have been mostly achieved, and, in light of the change of control of the project, some are no longer applicable.
MMBF Földgáztároló Zártkörűen Működő Részvénytársaság as Borrower (“MMBF” or the “Project Company”), the operator of the Szőreg-1 gas storage.
€100 million equivalent secured project finance loan, of which a Euro tranche of €40 million and a Hungarian Forint tranche of Ft18 billion.
The original cost for completing the gas storage was €611 million.
Categorised B. The Project is compliant with EBRD environmental and social requirements. In line with the EBRD requirements, the environmental and social due diligence report, along with the Stakeholder Engagement Plan, ESAP and environmental and social management plans are posted at the MMBF website. The gas storage facility has OHSAS 18001 certification and HSE experts are present on-site. Well-casing integrity monitoring is regularly conducted by to identify and prevent gas leaks.
In line with the IPPC reporting requirements, MMBF Gas Storage facility conducts monitoring of soil and groundwater; the analyses show that the baseline contamination values remain unchanged since the original environmental and social due diligence. Stormwater and produced water are collected treated prior to final disposal. Regular noise measurements are conducted at different points. Proper waste collection is provided throughout the site. In line with IPPC permit, an annual report, containing information on waste; CO2 and other ambient emissions, soil and groundwater quality and monitoring programme, is submitted to local environmental authorities.
All pipelines are equipped with automatically-operated block valves, which will allow cutting of a flow of gas in case of an abnormal flow or pressure rates. Pipelines are equipped with cathodic protection stations to prevent corrosion. Wells are equipped with blow-out preventers and gas detectors. Wells are inspected prior to the start-up of gas injection and withdrawal operations. Fire extinguishers are provided throughout the site. All wells and processing facilities are fenced off; and equipped with CCTV cameras. The entrance to the facilities is gated, visitor registration and HSE induction takes place. Emergency drills are carried out once a year; coordination of emergency planning with the neighbouring businesses and communities is a responsibility of the Hungarian Disaster Management Authority. Any grievances or information requests are dealt with by the MMBF dispatching centre operational 24/7.
The original ESAP, which was mainly aimed at addressing issues during the construction, was revised to take into account a current status of operations and also a change of ownership. The ESAP contains measures to ensure that all required environmental, health and safety performance and reporting requirements are complied with by the new Borrower. The Borrower will need to submit satisfactory annual environmental and social reports to the Bank.
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